Ramsay (Trustee) v Upson

Case [2016] FCA 1546

FEDERAL COURT OF AUSTRALIA

Ramsay (Trustee) v Upson [2016] FCA 1546

File number: QUD 521 of 2016
Judge: COLLIER J
Date of judgment: 20 December 2016
Catchwords:

PRACTICE AND PROCEDURE – application for summary judgment under r 26.01(1)(e) Federal Court Rules 2011 (Cth) and s 31A Federal Court of Australia Act 1976 (Cth) – whether respondent had reasonable prospect of successfully defending proceeding – “real” as distinct from “merely arguable” or “fanciful” prospect of defending proceeding – trustee prima facie entitled to vacant possession – whether properties purchased using “protected money” – whether deed of settlement signed under duress – no steps taken repudiate deed of settlement in timely way

BANKRUPTCY – whether properties purchased using compensation money under s 116(2)(g) Bankruptcy Act 1966 (Cth) – whether money used to purchase properties “protected money” – property purchased jointly in names of husband and wife – Stankovic v Van der Velde [2012] FCA 1436 – wife’s half of amount provided by husband to purchase properties presumed subject of a gift by way of advancement to wife
Legislation:

Bankruptcy Act 1966 (Cth) ss 30, 55(2), 58A(1), 58A(2), 77(1)(e), 77(1)(g), 116(2)(g), 116(2)(n), 116(3), 116(4)

Federal Court of Australia Act 1976 (Cth) s 31A

Criminal Proceeds Confiscation Act 2002 (Qld) ss 28(3)(a)(iii), 31(1), 56, 58, 65(2), 78, 256A

Federal Court Rules2011 (Cth) rr 26.01, 26.01(1)(e)
Cases cited:

Bustfree Pty Ltd v Llewellyn [2013] QCA 103

Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd (2008) 167 FCR 372

Pao On v Lau Yiu Long [1980] AC 614

Rogers v Asset Loan Co Pty Ltd [2008] FCA 1304

Spencer v The Commonwealth (2010) 241 CLR 118

Spiteri v Nine Network Australia [2008] FCA 905

Stankovic v Van der Velde [2012] FCA 1436

SZWBH v Minister for Immigration and Border Protection (2015) 229 FCR 317

Unpaid Systems Ltd v Telstra Corporation Limited [2016] FCAFC 158

Vrsecky v Reaper [2015] FCCA 32

White Industries Australia Ltd v Commissioner of Taxation (2007) 160 FCR 298
Date of hearing: 10 October 2016
Registry: Queensland
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Category: Catchwords
Number of paragraphs: 68
Counsel for the First and Second Applicants: Mr C Jennings
Solicitor for the First and Second Applicants: Sajen Legal
Counsel for the First and Second Respondents: The First Respondent appeared in person, assisted by the Second Respondent

ORDERS

QUD 521 of 2016
BETWEEN:

HUGH DAVID RAMSAY AS TRUSTEE OF THE BANKRUPT ESTATE OF ROBERT JAMES UPSON

First Applicant

HUGH DAVID RAMSAY AS TRUSTEE OF THE BANKRUPT ESTATE OF BERYL JOY UPSON

Second Applicant
AND:

ROBERT JAMES UPSON

First Respondent

BERYL JOY UPSON (ALSO KNOWN AS SHERYL JOY UPSON)

Second Respondent

JUDGE:

COLLIER J

DATE OF ORDER:

20 DECEMBER 2016

THE COURT ORDERS THAT:

1.Pursuant to r 26.01(1)(e) of the Federal Court Rules 2011 (Cth) the first applicant have judgment against the first respondent for the whole of his claim.

2.Pursuant to r 26.01(1)(e) of the Federal Court Rules 2011 (Cth) the first…

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Ramsay (Trustee) v Upson [2016] FCA 1546
Case
[2016] FCA 1546
Decision Date

CaseChat Overview and Summary

The case of Ramsay (Trustee) v Upson involved an application for summary judgment brought by Mr Ramsay, as the trustee of Mr and Mrs Upson’s bankruptcy estates, against the Upsons. The trustee sought an order for the Upsons to vacate two properties located at 71 and 73 Timor Avenue, Loganholme, so that the trustee could sell them to satisfy debts owed by the Upsons. The Upsons opposed the application on the grounds that the properties were purchased with protected accident compensation money and that the deed of settlement signed by the parties was done under duress.

The primary legal issue before the court was whether the Upsons had a real prospect of successfully defending the trustee’s claim for vacant possession of the Timor Avenue properties. The court needed to determine whether the properties were indeed purchased using protected money, and if the deed of settlement was signed under duress. If the Upsons could demonstrate a real prospect of successfully defending these claims, the court would not grant summary judgment.

The court found that the Upsons’ arguments lacked substance and did not constitute a real prospect of success. The Upsons failed to provide any documentary evidence to support their claim that the properties were purchased with protected accident compensation money. Additionally, the court held that any pressure placed on the Upsons to sign the deed of settlement did not amount to duress, as they had willingly signed the document without legal advice and only sought to avoid further costs and a court proceeding. The court concluded that the Upsons had not demonstrated a triable issue constituting a defence to the trustee’s claim.

Accordingly, the court granted summary judgment in favour of the trustee, ordered the Upsons to vacate the Timor Avenue properties within 21 days, and awarded costs to the trustee. The Upsons were also ordered to pay the trustee’s costs of and incidental to the application on a party and party basis.

Orders

Orders of the court

1. Pursuant to r 26.01(1)(e) of the Federal Court Rules 2011 (Cth) the first applicant have judgment against the first respondent for the whole of his claim.

2. Pursuant to r 26.01(1)(e) of the Federal Court Rules 2011 (Cth) the first applicant have judgment against the second respondent for the whole of his claim.

3. Pursuant to s 30 and s 77 of the Bankruptcy Act 1966 (Cth), the respondents vacate Lot 259 on Registered Plan 118026 in the County of Stanley, Parish of Mackenzie (title reference 14250003) located at 73 Timor Avenue, Loganholme in the State of Queensland, within 21 days of the date of the Order.

4. Pursuant to s 30 and s 77 of the Bankruptcy Act 1966 (Cth), the respondents vacate Lot 260 on Registered Plan 118026 in the County of Stanley, Parish of Mackenzie (title reference 14250004) located at 71 Timor Avenue, Loganholme in the State of Queensland, within 21 days of the date of the Order.

5. In the event that the respondents fail to give vacant possession of the property referred to in paragraphs 3 and 4 of these Orders in accordance with these Orders, pursuant to r 41.10 of the Federal Court Rules 2011 (Cth) a writ of possession issue forthwith.

6. The first respondent pay the first applicant’s costs of and incidental to the application to be taxed on a party and party basis.

7. The second respondent pay the first applicant’s costs of and incidental to the application to be taxed on a party and party basis.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Before turning to the interlocutory application before the Court it is helpful to summarise the background facts.BACKGROUND Most of the background facts are not in dispute. On 12 September 2007 the State of Queensland commenced proceedings in the Supreme Court of Queensland against Mr Upson seeking (materially) restraining orders under s 28(3)(a)(iii) and s 31(1) of the Criminal Proceeds Confiscation Act 2002 (Qld) (the Confiscation Act) in respect of Mr Upson’s property. The Supreme Court of Queensland made orders on 27 September 2007 (and subsequent dates) restraining Mr Upson from dealing with his property other than his pension and rental income. On 24 February 2015 the Supreme Court gave judgment against Mr Upson in those proceedings and ordered him to pay the State of Queensland the sum of $954,450.73, being the adjudged value of the proceeds derived from illegal activity, under s 78 of the Confiscation Act. Mr and Mrs Upson executed debtor’s petitions under s 55(2) of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act) on 5 March 2015 and 13 March 2015 respectively. The trustee, Mr Ramsay, was appointed trustee of each estate in bankruptcy. At the date of the trustee’s appointment, Mr and Mrs Upson owned, as joint tenants, real property including that located at 71 and 73 Timor Avenue, Loganholme in the State of Queensland (the Timor Avenue properties). Following the decision of the Supreme Court, the State filed an application for forfeiture of the property of Mr Upson pursuant to s 56 of the Confiscation Act. In a letter dated 1 May 2015 from the Director of Public Prosecutions (the DPP) to the lawyer for the trustee the DPP said that:·The restrained property of Mr Upson was available to satisfy the proceeds order of 24 February 2015.·The bankruptcies of Mr and Mrs Upson would not impede enforcement action by the State of the proceeds order as the restrained property did not vest in the trustee in bankruptcy in light of the operation of s 58A(1) and (2) of the Bankruptcy Act.·The trustee would have an interest in any enforcement proceeding to the extent that any property not required to satisfy the proceeds order would become subject to sequestration upon the satisfaction and consequent discharge of the proceeds order. It appears that on 1 June 2012 Mr Upson had filed an application pursuant to s 65(2) and s 58 of the Confiscation Act seeking orders that certain property (including the properties at Timor Avenue) be excluded from forfeiture. Mr Upson’s bankrupt estate has a net deficiency of approximately $1.3 million and Mrs Upson’s bankrupt estate has a net deficiency of approximately $2.15 million. It also appears that during the second half of 2015 negotiations took place between Mr and Mrs Upson, the State of Queensland, and the trustee. These four parties executed a deed of settlement on 14 January 2016. In written submissions, Counsel for the trustee summarised this deed as follows:10.By a Deed of Settlement dated 14 January 2016 (“the Deed”), the State of Queensland, the Trustee, and the Upsons agreed that, conditional upon the Supreme Court making orders, inter alia, releasing the restrained property and dismissing the applications for forfeiture and exclusion; the real property subject of the restraining orders would vest in the Trustee and, upon payment by the Trustee to the State of Queensland of the Proceeds Assessment Order from the net proceeds of the sale of that real property, the State of Queensland released the Trustee and the Upsons from all claims and the Upsons released the Trustee and the State of Queensland from all claims: (cl.8.3 and 8.4)“of whatsoever nature [they] may have against any of them in respect of, or connection with the matters of and incidental to the Proceeding, the Recitals and the Property of the Trustee, the Estate of Mr Upson, the Estate of Mrs Upson, Mr Upson and Mrs Upson whether arising at common law, in equity, or under statute or otherwise.”

Evidence

Evidence Before The Court

On the other hand from written and oral submissions the case of the trustee is clear, and may be summarised as follows:·The Court has power to make an order that Mr and Mrs Upson vacate the Timor Avenue properties.·The trustee has a prima facie entitlement to possession of the Timor Avenue properties.·The Court should make a practical judgment about whether Mr Upson has any real prospect of making out his case at trial.·Mr Upson has asserted in evidence that his ownership of the Timor Avenue properties derives from accident compensation payments in New Zealand, which is protected money, however:○there is no documentary evidence in support of Mr Upson’s assertions;○given that Mrs Upson is a joint owner of the property, at most Mr Upson can only claim protected status in respect of half of the property;○in any event, this claim of Mr Upson falls within the release and discharge the subject of the deed of settlement.·Mr Upson also asserted that the deed of settlement is void for duress on the part of either (or both) the trustee and the State of Queensland, however:○any allegedly coercive conduct of the trustee should be viewed in its totality;○Mr Upson informed the trustee on 10 December 2015 that both he and Mrs Upson were “happy to sign without advice from a lawyer. We do not under any circumstances want to incur more costs. We don’t want it to go to court we want to sign”;○any pressure placed on Mr and Mrs Upson to sign the deed of settlement falls well short of illegitimate;○Mr and Mrs Upson took no step to repudiate the deed of settlement until the trustee took steps seeking vacant possession.EVIDENCE RELIED ON BY MR AND MRS UPSON The affidavits upon which Mr and Mrs Upson relied were as follows.Affidavit filed 22 August 2016 In this affidavit Mr Upson deposed, in summary:·He had a very serious industrial accident on 6 August 1978 and began to receive weekly payments from 13 December 1978.·He received a lump sum payment of $14,000 from “Accident Compensation Corporation” (ACC) as well as continuing to receive weekly payments.·He used some of the $14,000 as a deposit to purchase a property in New Zealand.·In 1987 he borrowed $40,000 from the Heritage Building Society using his ACC payments as proof of income. Every second week he would withdraw ACC money from the automatic teller machine and use it to pay his mortgage, which as he recalled was under $100 per week.·He also collected golf balls and sold them back to various clubs as this money paid for their day to day living expenses and enabled him to use the ACC money on the mortgage.·He lost a considerable amount of money in the 1987 share market crash.·On 1 September 1987 he and Mrs Upson sold their New Zealand property and used the profit on the property to buy the Timor Avenue properties.·In one year 1993 to 1994 he received a total of $83,332.18 from ACC.·In 1997 the mortgage on the Timor Avenue properties was discharged.·He and Mrs Upson were refused legal advice from Mr Ramsay in relation to the deed of settlement.·Mr Ramsay pressured Mr and Mrs Upson to sign the deed of settlement. Mr Ramsay told Mr Upson that the DPP was “playing hard ball and wanted to fire sale all our assets but he did not inform me that he was going to do the same and take away all my rights”.

Decision

Reasons for decision

That, however, is not the matter before the Court. The originating application before the Court, in respect of which the trustee seeks summary judgment, concerns the trustee’s entitlement to vacant possession of the Timor Avenue properties. Any claim of Mr Upson to the proceeds of the sale of those properties does not, in my view, constitute an obstacle to the trustee exercising his powers to realise them pursuant to his powers under the Bankruptcy Act.CONCLUSION For the reasons I have given, the arguments put forward by Mr and Mrs Upson to defend this claim and resist giving vacant possession of the Timor Avenue properties to enable the trustee to exercise his powers in respect of those properties appear to have no substance, much less reasonable prospects of success. Mr and Mrs Upson have not demonstrated that there is a triable issue constituting a defence to the trustee’s claim against them before the Court. It follows that the trustee is entitled to summary judgment for the whole of his claim against both respondents. I note that, in the applications filed in this Court, the trustee referred to himself as “the first applicant”. I will make orders describing the trustee in those terms. Finally, no reason has been put to me why costs should not follow the event. I make orders accordingly.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.